#Official Mining Thread

[UrbanSG]

From the adelaidenow website:

Rex Minerals shares surge threefold on Hillside project results
January 12, 2009 12:30pm

REX Minerals shares jumped threefold after the junior explorer reported high-grade copper and gold drill results from its Hillside project in South Australia.

Managing director Steve Olsen described the discovery as ``spectacular'' and said the company had not yet intersected the source of the gravity anomaly, which is expected to contain the highest concentration of copper.

Rex Minerals shares had gained 19 cents, or 146.15 per cent to 32 cents by 1108 AEDT.
Hillside is located on the Yorke Peninsula in SA.

[Wayno]

From the adelaidenow website:

Rex Minerals shares surge threefold on Hillside project results
January 12, 2009 12:30pm

REX Minerals shares jumped threefold after the junior explorer reported high-grade copper and gold drill results from its Hillside project in South Australia.

Managing director Steve Olsen described the discovery as ``spectacular'' and said the company had not yet intersected the source of the gravity anomaly, which is expected to contain the highest concentration of copper.

Rex Minerals shares had gained 19 cents, or 146.15 per cent to 32 cents by 1108 AEDT.
Hillside is located on the Yorke Peninsula in SA.

This is really good! I believe yorke peninsula has shallow sediment deposits (meaning you don't need to remove much overburden soil to access the good stuff), and it's close to heaps of tradespeople (you could almost commute from Adelaide). Hope they get financing without too much grief...

[UrbanSG]

The mining boom has well and truely ended and is now turning into a bust fairly quickly. I can't believe some thought it would continue without any more busts thanks to China. Even the long term outlook isn't great. Economics always works in boom and bust cycles. You just don't want the busts to be severe and this one is getting worse every day.

Who knows about the Olympic Dam expansion considering BHP are now cutting staff.

From watoday.com.au:

BHP to cut 6000 jobs worldwide amid downturn
January 21, 2009 - 8:47AM

BHP Billiton will axe 6000 people from its global workforce amid the economic downturn.

The company said today it would cut its 101,000 strong global workforce by about six per cent in response to world-wide economic conditions.

``This is very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions,'' BHP Billiton chief financial officer Alex Vanselow told reporters on a conference call.

BHP Billiton will suspend operations at the Ravensthorpe nickel mine and reduce output at its Mount Keith mine in Western Australia, resulting in the loss of 2100 contractor and employee jobs.

In addition, the company will slash about 550 jobs at Pinto Valley in the US, 200 jobs at the Olympic Dam expansion project in South Australia and 2000 jobs at base metals in Chile.

BHP Billiton has estimated the job cuts will result in a one-off total cost of about $US500 million ($772.6 million).

[UrbanSG]

So 200 office jobs to go in Adelaide as they finish their ODX EIS, that is a great outcome, not, what a crock! I don't think we will see much action on the mine after the EIS, all sounds very much pre-planning with extended timelines that will likely keep on getting extended and extended.

From adelaidenow:

BHP to cut 200 jobs related to Olympic Dam expansion in South Australia
CAMERON ENGLAND, CHIEF BUSINESS REPORTER
January 21, 2009 10:30am

ABOUT 200 local BHP Billiton employees will lose their jobs as part of 6000 lay offs worldwide.

The South Australian lay offs are related to the company approaching the completion of work on the Environmental Impact Statement (EIS) for the proposed multi-billion dollar expansion of the Olympic Dam copper, gold and uranium mine in central SA.

BHP spokeswoman Samantha Evans said there would be no job losses at Olympic Dam itself however.

"Up to 200 positions related to the OD expansion project will be reduced,'' Ms Evans said.

"We have not announced cutbacks in OD operations. If there are any material changes at OD, we would of course announce it.''

The company said today it expected to release the EIS for public comment by the middle of the year. This compares with a previous anticipated release scheduled for April.

"Selection study work on the proposed Olympic Dam Expansion is effectively complete,'' the company said.

"A Draft Environmental Impact Statement (EIS) based on the five stage project configuration has been provided to the Federal, South Australian and Northern Territory Governments for a compliance review, with the intention that it be released for public comment during the first half of calendar year 2009.

"Pending government approvals for the EIS and consistent with the prevailing economic circumstances, project activity will be scaled back to that necessary to support the approvals process and the study of a number of mining and processing technology options.''

The cut of 6000 workers worldwide equates to about 6 per cent of BHP's 101,000 strong workforce.

"This is very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions,'' BHP Billiton chief financial officer Alex Vanselow said this morning.

BHP Billiton will suspend operations at the Ravensthorpe nickel mine and reduce output at its Mount Keith mine in Western Australia, resulting in the loss of 2100 contractor and employee jobs.
In addition, the company will slash about 550 jobs at Pinto Valley in the US and 2000 jobs at base metals in Chile.

BHP Billiton has estimated the job cuts will result in a one-off total cost of about $US500 million ($A772.56 million).

[UrbanSG]

Here comes mr positive Rann. I'll believe the expansion will go ahead when I see it actually get approved by the board.

The EIS and formal talks are all very well but the board has the ultimate decision. Depending on the economic conditions it could easily be delayed. SA may be putting far too much weight on the ODX project occurring in the near future imo.

The fact Rann was only informed by BHP today that they remain committed to Olympic Dam is a worry in itself.

From adelaidenow:

Olympic Dam is safe despite job losses, says Rann
GREG KELTON, STATE EDITOR
January 21, 2009 11:50am

APPROVALS for the giant Olympic Dam mine expansion remain on track despite huge job losses at BHP operations across Australia, Premier Mike Rann says.

Mr Rann said BHP Billiton had indicated to him today that it remained committed to the project.

BHP has announced about 6000 jobs will go worldwide with more than 2000 alone in Western Australia, where two nickel mines will be closed down. About 200 jobs are expected to go in South Australia.

"Clearly challenging global circumstances are having an impact on all companies and the world's largest miner is not immune," Mr Rann said.

"This company, like other mining companies, is being forced to cut its cloth because of the global financial crisis."

Mr Rann said, however, the good news for South Australia was that production targets at Olympic Dam were unchanged and the planning continued for the expansion of what would be the world's largest open cut mine.

"Formal indenture negotiations between the State Government and BHP Billiton begin next month, on schedule," Mr Rann said.

"Both the company and the Government remain committed to ensuring that the process for the environmental approvals will proceed as planned."

A major environmental impact statement on the proposed multibillion-dollar expansion is being prepared and is expected to be available for public comment from May.

The Government has already established a top-level task force aimed at establishing which services – such as roads, power, water, medical, police and educational facilities – the state will need to provide should the expansion proceed.

[Wayno]

It's actually fortunate the majority of South Australian mines are due to start production in 2010. If they'd started only 2 years earlier then job losses and company collapses across our state would today be much greater, and we'd be feeling pain similar to what's just now emerging in WA.

Sure, some mines scheduled to start in 2010 might delay to 2011/12, but mining is a long term game and counter-cyclical investment is a must. Mining companies simply must be "ready to go" when the next economic upturn starts. This is also true for ODX, but as you say UrbanSG, we can't rely on Media Mikes comments - we need firm direction from the BHP Board.

In recent years SA seems to have developed the knack of missing the economic peaks and troughs, and instead just experiencing slow & moderate growth (avoids the giddiness of being on a rollercoaster ride)...

[Wayno]

It's hot hot hot...

These guys are close to the national grid, and could be contributing 200MW of clean base-load electricty within 2 years...

http://www.news.com.au/adelaidenow/stor ... 55,00.html

HOT rocks explorer Panax Geothermal has revealed 41,000 petajoules of inferred resource at its Penola tenement in the State's South East.

The company said 5 per cent of the inferred resource could be classified as a measured resource - sufficient to operate a 200 MWe geothermal base-load power plant for 30 years, subject to a full feasibility study.

Panax aims to have Australia's first grid-connected geothermal power plant operational by 2011.

Its application for a $7 million drilling grant from the Federal Goverment also had been upgraded to a full merit assessment, executive director Kerry Parker said.

Mr Parker said the company was "quietly confident'' of grant approval which would see drilling at Salamander 1 in the advanced Penola Project, part of the company's limestone Coast geothermal project in SA, start by mid 2009.

He said Panax was the only hot sedimentary aquifer project in Australia to reveal a measured resource highlighting Panax's advanced status.

Hot fractured rock explorer Geodynamics has Australia's most advanced project near Innamincka in the State's far north.

"The measured resource is quite significant. The small amount of measured resource more than clearly demonstrates the advanced nature of the project,'' he said.

The company would proceed, either with a grant or alternative funding, with production tests, with aims to make Salamander 1 part of a 5 to 10 MWe grid-connected, commercial geothermal power plant by 2011.

The Penola Project has excellent access to infrastructure, with the main National Electricity Market Management Company (NEMMCO) grid traversing the entirety of the project area, it said.

Panax has no debt and $8 million in cash to explore existing reservoirs containing hot geothermal fluids, which have less risks than hot fractured rock geothermal projects and a much shorter development time, it said.

[frank1]

That news is not as bad as it seems. 200 jobs will be lost from the ODX expansion group, but no jobs at ODX or any other currently operating mines.
When you think about it 200 jobs is nothing compared to 2000 jobs in WA with some mines closing and currently operating ones significantly cutting back.
I think 200 jobs out of 6000 (2000 from WA) isn't that bad.

[UrbanSG]

You have to put those WA figures in context as well. The numbers are big there but there are thousands more people employed in mining over there. We are already comming off a low base.

The concerning part about our mining job losses is they are office jobs associated with ODX, our biggest proposed project. They would have been kept on if the project was to continue per the latest timelines provided. You don't get rid of 200 skilled office staff if you are about to move into the next important phase of the projects planning. To me it suggests a big extension to the expected construction of this project with significant delays.

The EIS may suggest otherwise but that is not binding just proposed time frames I would have thought.

Also, hard to tell how reliable these people are but in the comments section on adelaidenow a few claim to be ODX team employees who have been told the project has been cancelled or at least put on hold for a further 2 years. The further 2 year blowout sounds more likely to me.

[AtD]

As I posted in SSC, mining is just under 30% of the WA economy, but only 3.5% of the SA economy.

Derived from the ABS State Accounts

Code: Select all

Industry Gross Value Added, Percentage contribution to state total before taxes and subsidies, Chain Volume Measure, 2007-08
                                      NSW     VIC     QLD     SA      WA   
Agriculture, forestry and fishing      1.34    2.90    2.85    5.97    2.46
Mining                                 3.03    1.95   10.63    3.55   29.82
Manufacturing                         10.48   13.06    9.55   13.28    8.49
Electricity, gas and water             1.92    2.64    1.71    2.89    2.13
Construction                           7.52    7.15    8.89    6.86    7.89
Wholesale trade                        5.38    6.19    4.53    4.24    3.44
Retail trade                           5.82    5.78    7.22    6.20    4.52
Accommodation, cafes and restaurants   2.43    1.51    2.62    2.27    1.14
Transport and storage                  4.98    4.64    6.73    5.05    4.37
Communication services                 2.73    3.41    2.24    2.39    1.91
Finance and insurance                 11.09    9.50    5.49    6.52    4.11
Property and business services        15.50   14.25   11.26   10.36   11.34
Government administration and defence  3.74    2.72    4.43    3.73    2.18
Education                              4.47    5.24    3.99    5.01    2.64
Health and community services          6.50    7.02    6.30    8.08    4.81
Cultural and recreational services     1.80    1.88    1.28    1.69    1.04
Personal and other services            1.89    2.00    2.01    2.57    1.66
Ownership of dwellings                 9.38    8.15    8.26    9.33    6.05
Total all industries                 100.00  100.00  100.00  100.00  100.00

[UrbanSG]

Now here comes the truth and it isn't pretty imo, from the abc website:

BHP to cut 200 SA jobs

BHP to slash 3,300 Australian jobs BHP Billiton says it is cutting 200 jobs from its plan to expand the Olympic Dam copper and uranium mine in South Australia's north.

A company spokeswoman says the jobs will go from the working team overseeing the expansion and will not affect production.

BHP says the expansion project is being scaled back because of global economic uncertainty.

BHP Billiton's chief financial officer, Alex Vanselow, says there is also some uncertainty about the project's environmental assessment.

"Olympic Dam as an operation continues to produce and we have been producing extremely well," he said.

"On the project, on the expansion itself, all we're doing is adjusting the spend rate and adjusting the project size to the uncertainty, one in the economic environment, and second in the timing of the EIS process."

South Australian Premier Mike Rann says BHP has told the Government it remains committed to the expansion project.

Analyst Toby Grimm says there is a risk the expansion could be mothballed if the global crisis continues.

"The conditions for resource companies and miners in general have deteriorated quite considerably over the past sort of 12 months, metal prices have fallen across the board by at least 30 and in some cases 70 per cent," he said.

"That does indeed put a lot of overhang on expansion plans from mining companies everywhere in the world, BHP being no different."

[Professor]

From Northern Miner

"Uranium Price Will Rebound: Analysts
Monday, December 08, 2008 Despite the negative outlook for many other commodities, many analysts now forecast that uranium prices will go up in the medium-to longterm due to strong fundamentals..."

Olympic Dam is mainly a uranium mine with good copper and gold as additional minerals. With more nuclear reactors planned and under construction to generate power (and reduce carbon emissions etc) the long term viability of the mine is assured.

BHP will be bleeding resources around the world as the unviable mines and expansions are shelved. I remain optimistic but the global situation for mining is pretty bleak.

2009 will get tough for many people in general and time to batten down the hatches!

[UrbanSG]

I think it is looking likely the underground operations will be expanded and the huge open pit expansion may be part of the EIS but it won't occur for a long long time. SA always seems to miss the boat. We always hype up towards the end of a boom and then the bust comes and back down we go to reality. Whilst other states have marched forward. We won't be hearing anymore stupid SA - Dubai comparisions for a while I suspect, thankfully.

From The Australian:

BHP slows down its Olympic Dam expansion
January 22, 2009

BHP Billiton has puts on hold plans to spend billions of dollars to create the world's biggest open-pit mine.

It has scaled back its Olympic Dam expansion team, axing 200 jobs.

The Melbourne-based miner announced major global job losses and production cuts in its quarterly report yesterday and revealed that it would slow the expansion of its world-class Olympic Dam asset in outback South Australia.

BHP has consistently talked up the potential of the the copper-gold-uranium deposit during its failed $135 billion bid for rival Rio Tinto, but plunging commodity prices and weak market conditions have prompted it to scale back action to more than double Olympic Dam's production capacity.

"Pending government approvals for the environment impact statement and consistent with the prevailing economic circumstances, project activity will be scaled back to that necessary to support the approvals process and the study of a number of mining and processing technology options," BHP said.

The miner said selection study work on the proposed expansion was effectively complete, and that a draft EIS based on the five-stage project configuration had been submitted to the federal, South Australian and Northern Territory governments for a compliance review.

BHP chief financial officer Alex Vanselow said the company was adjusting the rate of its spending and the project size due to the uncertain economic climate and the fact that the EIS process would take time.

"What we are doing is aligning the spend level to the current economic environment and to that uncertainty in terms of length of process, but we will continue developing the project," Mr Vanselow said.

In its report yesterday, BHP said spending on the Olympic Dam expansion for the six months ended December 31 was $US112million. Analysts have put the cost of the planned expansion at about $15 billion.

Fat Prophets analyst Gavin Wendt said he was not surprised by the Olympic Dam slowdown, given that the last large-scale project BHP had commissioned was the Ravensthorpe nickel mine in Western Australia, which the company revealed yesterday was being "indefinitely suspended".

The company would be reluctant to push ahead with major expansions, Mr Wendt said.

"It will be hard to commit to major capital spend until commodity prices come back." He added that BHP had again failed to provide any clarity on the project, which was still "up in the air" with no detailed time frame.

"BHP has been very opaque with respect to the development timetable," Mr Wendt said. "But it is not surprising because they have been cagey in regards to mine closures and cutbacks, whereas Rio Tinto have been the opposite and have been open and transparent."

Ord Minnett resources analyst Peter Arden said the size of the Olympic Dam project had made BHP reluctant to commit to full details on the size, scope and cost of the expansion. "They were previously worried there would not be enough people or equipment to do it, and now that is no longer a problem but there is not enough market for the expansion," Mr Arden said.

He added it had always been a "wish list" item for the world's largest miner, but said it also needed the right conditions to fully commit.

"They are struggling to find the internal momentum for it and will cop flak, but that will be the least of their problems," he said.

[joshzxzx]

As I posted in SSC, mining is just under 30% of the WA economy, but only 3.5% of the SA economy.

Derived from the ABS State Accounts

Code: Select all

Industry Gross Value Added, Percentage contribution to state total before taxes and subsidies, Chain Volume Measure, 2007-08
NSW VIC QLD SA WA 
Agriculture, forestry and fishing 1.34 2.90 2.85 5.97 2.46
Mining 3.03 1.95 10.63 3.55 29.82
Manufacturing 10.48 13.06 9.55 13.28 8.49
Electricity, gas and water 1.92 2.64 1.71 2.89 2.13
Construction 7.52 7.15 8.89 6.86 7.89
Wholesale trade 5.38 6.19 4.53 4.24 3.44
Retail trade 5.82 5.78 7.22 6.20 4.52
Accommodation, cafes and restaurants 2.43 1.51 2.62 2.27 1.14
Transport and storage 4.98 4.64 6.73 5.05 4.37
Communication services 2.73 3.41 2.24 2.39 1.91
Finance and insurance 11.09 9.50 5.49 6.52 4.11
Property and business services 15.50 14.25 11.26 10.36 11.34
Government administration and defence 3.74 2.72 4.43 3.73 2.18
Education 4.47 5.24 3.99 5.01 2.64
Health and community services 6.50 7.02 6.30 8.08 4.81
Cultural and recreational services 1.80 1.88 1.28 1.69 1.04
Personal and other services 1.89 2.00 2.01 2.57 1.66
Ownership of dwellings 9.38 8.15 8.26 9.33 6.05
Total all industries 100.00 100.00 100.00 100.00 100.00

These stats are amazing...

I cant beleive that WA economy is pinned by one industry.. There doesnt seem to be any diversification with 1/3 being in the mining industry...

Their economy could really suffer if commodity prices don't improve quickly.... As many many more people will be losing their jobs...

What does this mean for SA???

From what i can see it may mean people that originally moved there for job prospects could move back to SA due to Housing affordability.. Which in turn cound be fantastic for house prices and new home starts... This will then keep our economy going and hopefully not dipping into the big R

This may pan out to be quite good for our state...

[mattblack]

SA is in a much better position than most. Access economics predicts that SA and Tas will be the only states not to go into recession. Now in terms of the global outlook this is massive. Talk of SA always missing the boat might be true in some sense but we are definately on the right boat over the next couple of years. Yes the global outlook is bad, the PM isnt just saying it to scare the crap out of people but to actually prepare people for it, a whole generation doesnt know what the big R will mean to daily life, income and most of all job losses. Job losses are to be expected and if 200 jobs go from a company that employs 1000's its a pretty good outcome. We have the right framework, incentives and infrastucture to keep the miners interested and uranium will be the commodity of choice with the US and China still focusing heavily on nuclear over the next decade.

Our defence sector is also stiving ahead and major infrastucture works are still a go. Its not all doom and gloom.